Keywords

Introduction

In the contemporary world of higher education, the industry’s role has always been a critical factor. The industry is the job provider to the university graduates and other supports such as internship facilities for students, research funds, executive education collaborations, and consultancy opportunities. Business organizations need to provide professional and skill development programs to their employees permanently. Therefore, the business always looks for quality, practical, convenient, and cost-effective training and development programs. To meet this need as per their convenience and choice, the corporate leadership opted to create a university system within the corporation by expanding their existing human resource development departments or divisions.

To run the corporate university, the corporate leadership outsources expertise and uses its human talent available inside the company. Considering these developments, the university board and management should be prepared to answer these questions: What would be the future of corporate universities? What will happen to the conventional university system if the corporate university system keeps growing and dominates the education industry? Which are the vacuums in the education industry, the corporate university system is filling up now? What should be done to fill up those vacuums by the conventional university system? Is it possible to build synergies and collaborative projects between the conventional university system and the corporate university system?

Traditionally, companies use broader approaches to do the job of training and developing the workforce they have. To a greater extent, these training and skill development programs include courses of specialization, operation management, and general management. Given the different needs of different trainees and work dynamics inside the company, these courses are prepared and offered in different formats (i.e., workshops, meetings, lectures, demonstrations, field visits, etc.). Generally, such training programs are designed and imparted by each department or by the company’s training department or human resource management department. In some cases, depending on the type and nature of a specific training and development program, companies outsource trainers or consultants from other organizations (business to business training and development). In other cases, companies hire trainers and consultants from the traditional universities, provided that most universities offer continuing education programs (short and long courses) to their corporate clients. Companies sometimes hire university services (trainers) to train their workers in specific fields, which are generally called “in-company” training provided by the universities. Such training programs aim to improve the job-related competencies (both soft and hard) of the employees.

Justifications for the Emergence of the Corporate University System

We live in the context of booming global knowledge societies and dealing with learning organizations. Competition in the Industry based on innovation, quality, design, and operational efficiency has increased drastically. Knowledge workforce has become the most crucial success factor in the industry. Corporations want to remain ahead of their counterparts in the industry, nationally and internationally. Therefore, business organizations want to have the training and development strategies institutionalized and internalized. This will give them complete control over the design, delivery, evaluation, and feedback of the diverse training programs they require for their workforce. Consequently, the rapid rise of the corporate university education model is a clear indication of how business organizations are trying to address this need for in-house knowledge acquisition and management (Vossen & Jaeshke, 2002). As the value of the corporate universities is evident for the parent corporations and that the strategic relevance of knowledge increases, the development of a corporate university receives more and more priority in companies (Rademakers, 2001). That being said, roles assigned to and justifications of the existence of a corporate university go beyond the simple operational and tactical impacts of such systems on the parent corporations. For instances, having a corporate university will result in:

  • The strategic development of the company workforce is in line with the strategic planning of the company.

  • Designing a holistic development framework linking all organizational aspects and levels.

  • Considering that human development is more than simple training, it deserves a long-term approach and comprehensive system.

  • Understanding that learning as a competitive business variable is not a one-time take-home activity; it is a lifelong process, system, and culture.

What is a Corporate University?

A corporate university is an internal teaching and learning system that helps an organization develop and distribute knowledge among its employees. A Corporate University (also known as an Academy, Institute, learning center, or college) is an organizational entity dedicated to turning business-led learning into action (Hassan, 2006). It is designed, driven, and intricately linked to the company’s business strategy to achieve corporate excellence through improved staff performance and a company-wide culture in which innovation can thrive. In addition to generating value from their intellectual assets, it helps organizations to identify, retain and promote critical employees while at the same time providing valuable, work-based learning and career development opportunities for staff. A Corporate University refers to the corporatization of the traditional university (Walton, 2005). Since traditional universities are increasingly concerned about the profitability and revenue generation than the quality, affordability, and convenience of the education programs they offer, they create ample space for the corporate universities to take over. A corporate university is an emerging model for continuous training in the corporate world and continuous learning for employees (El Tannir, 2002). The corporate university is a management intervention that takes a company or organization into a new robust and sustained phase of business development that it would not achieve with its current levels of opportunity for thought leadership and styles of learning behavior (Dealtry, 2001). Therefore, a corporate university is an organizational set up within a company in the form of a department or business unit with a particular focus on performing the above roles. In El-Tannir (2002)’s words, a corporate university is a function or department in the company that develops the skills for employees and integrates them into the strategic orientation of the corporation with a strong emphasis on leadership and improved work-related performance. Corporate universities help employees build individual competencies (knowledge, abilities, and values), thus helping the organization remain competitive and improve its organizational efficiency.

The Growth of Corporate Universities

The existing literature on corporate universities suggests that the birth of corporate universities dates back to 1940 though the actual growth of such universities took off in the 1990s. The birth and growth of a corporate university is a relatively new phenomenon; therefore, the debate about what is a corporate university, what they do, and how they operate is still underway in academia and Industry (Shaw, 2005). Corporate universities have gone from being aligned to knowledge management and organizational learning to practices that include social, technological, and organizational processes (Prince & Stewart, 2002). Walt Disney Corporation started with the idea of a corporate university; moreover, though the idea of a corporate university was initiated in the USA, several such institutions start operating in Europe (i.e., Germany, France, and United Kingdom) and Asia (i.e., China and Japan).

Three different growth phases of corporate universities have been identified in the existing literature on corporate universities (Jansink et al., 2005; Rademakers, 2001): the operational, the tactical, and the strategic. So it can be ascertained that a corporate university is designed to serve a particular objective of the corporation, which could be operational, tactical, and strategic. These phases or types of universities are briefly explained based on the analysis of Jansink et al. (2005) in the following section.

Phase: 1 Operational corporate University: At this stage of the development, a corporate university emphasizes centralizing the existing training programs. Therefore, issues such as operational efficiency, improving the existing training programs, and making those training programs relevant to the overall company’s goals, are essential at this stage of a corporate university.

Phase: 2 Tactical corporate University: At this stage, a corporate university considers the company’s priorities in determining the contents of the training programs. Here due importance is given to the connection between the company goals and individual employee learning objectives. The emphasis is on knowledge dissemination since the corporate university training programs are based on the current knowledge of the company.

Phase: 3 Strategic corporate University: At this stage, a corporate university emphasizes knowledge development, involving students (employees) and teachers (trainers) through research and development programs. This is a type of new knowledge creation stage of the corporate university.

Though corporate universities are formed and developed in phases like any other newly established organization, a fully developed corporate university needs more than these three-phase approaches (operational, tactical, and strategic). In order to become a “corporate university” in real terms, one should consider other essential characteristics, for instance, size of the university, legal status, management system, organizational setup, types of academic and non-academic activities.

The Potential Benefits of the Corporate Universities for the Corporations

Companies in all sectors and sizes, including high-tech businesses, professional services firms, consultancy, and companies with a solid scientific or technology base, can implement such strategic projects within their existing organizational setup. Therefore, it is easy to establish a corporate university system within a business organization. Establishing a university will help the organization in many ways (Blass, 2005):

  • Increasing the ability of the organization to improve the rate of intra-organizational learning to match the increased rate of change in the external environment (industrial and macro environment).

  • Enhancing the potential of the organization to respond effectively to the growing multidimensional challenges of the globalized world.

  • Building the capability of the company to identify and use new information and communication technology.

  • Enabling the company to link its goals with the learning strategies.

  • Strengthening the corporate culture in a multicultural business environment (to align corporate culture with the global culture (industry and market cultures).

  • Focusing organizational resources on learning and knowledge in order to create and sustain a competitive advantage.

  • Facilitating the establishment of an in-house knowledge management system.

A corporate university model can go beyond the company’s simple skill development training, refresher courses, and orientation programs to much more advanced learning programs. For example, Prince and Stewart (2002) identify four areas of a corporate university: Knowledge systems and processes; networks and partnerships; people processes; and learning processes.

The Specific Roles and Functions of Corporate Universities

Corporate universities go beyond simply training the company workforce to educate diverse stakeholders, including suppliers, distributors, and customers, to meet organizational goals and strategies (Meister, 1998). Corporate universities also support organizational efforts to achieve their mission by enhancing individual and organizational learning, knowledge, and wisdom (Allen, 2002). Corporate universities are learning infrastructures, an extension of organizational learning culture which promotes a proactive approach to improve organizational performance by aligning learning to strategy. Incorporate universities, learning is focused on developing competencies, and learning is adopted at all levels of the organization and is a continuous process (Eccles, 2004). The mission of a corporate university is diversified into achieving the corporate strategy objectives, conveying its culture, and providing a systematic curriculum. Such curriculum is based on three factors (Densford, 1998; Meister, 1998):

  • The corporate citizenship that delivers the values, vision, and culture of the organization.

  • The contextual framework involves knowing customers, competitors, industry trends, and best practices.

  • Core competencies of the company transferred from the experts to the learners.

In the existing literature on corporate universities, several other terminologies have been used, which expand the scope of corporate universities from being professional development centers to complex learning network, institute of learning, school of management, business learning and academy. In recent years there has been a greater clarity on what corporate universities value, with the New York-based Corporate University Exchange introducing in 1999 five criteria for excellence, listed by Murray (2002) as:

  • Alignment: Aligning corporate learning to business strategies.

  • Alliances: Developing strategic learning alliances with external providers.

  • E-learning: Creating a learning environment through technology.

  • Marketing: Developing and implementing innovative marketing and branding techniques.

  • Measurement: Measuring the value of an organization’s investment in learning.

Other roles and functions of corporate universities are (Andresen & Irmer, 1999; El-Tannir, 2002):

  • To support company initiatives (Initiative-driven approach).

  • Lead organizational changes (Change-management catalyst).

  • Building organizational leadership (Leadership-development agent).

  • New business development (Business development instrument).

  • Establishing and managing customer and supplier relationship (Customer/supplier relationship management tool).

  • Promoting competency-based career development (Competency-based, career development facility).

Types and Models of Corporate Universities

There are different types and models of corporate universities, so there is no one standard or universal type or model of the operation of corporate universities. The type and model of corporate universities may vary based on the setup of a corporate university within the company, functions, and roles assigned to a corporate university, the size of a corporate university, and the growth stage (growth stage) of a corporate university. For Freisna (1997), corporate universities are categorized into three prototypes based on the specific roles assigned to them:

  • All organizations, regardless of their nature of businesses and type of operation, have some best practices (i.e., quality management) and core competencies (i.e., cost management). Hence, a corporate university is formed to capitalize on and sustain these current best practices and core competencies.

  • Organizations require being flexible and dynamic in the face of changing environment. Therefore, understanding issues like change leadership, organizational development, and designing new corporate strategies demand continuous and integrated efforts. A corporate university can be instrumental in helping the corporation to be proactive and knowledgeable.

  • Knowledge is power, and having an internal knowledge management institution can be critical success factors and competitive strategy. For this to happen, a corporate university is assigned to drive and shape corporate strategic direction and explore future opportunities.

Similarly, Walton (1999) classified corporate universities into three types or levels based on the scope and the extent of their functions such as:

  • A corporate university that focuses on narrow and heavily value-driven and mainly classroom-based activities. Such corporate universities are called first-generation corporate universities.

  • A corporate university that provides culturally specific class-based training curriculum which addresses functional skills, cultural issues, and remedial learning. Such corporate universities are called second-generation corporate universities, and these are often characterized by partnerships with other employers, educational institutions, and the general community.

  • A corporate university that is sophisticated in learning philosophy and a matured approach to human resource development and growing evidence of virtuality. These corporate universities are good at using the new technology for learning, they focus on process rather than the place, and they develop the human capital of all employees with an emphasis on creativity and strategic directions.

Other researchers (i.e., Fresina, 1997; Hilse & Nicolai, 2004), have categorized corporate universities based on their objectives:

  • Individual qualification; It means a corporate university focuses on processing and transferring specific company knowledge critical to the company’s success. The focus is on individual learning and training and learning through short seminars and specialized courses.

  • Organizational change: It means a corporate university focuses on individual learning but the organizational change process. Training and learning programs include informative forums and workshops.

  • Strategic renewal: It means corporate university links learning and business development. For example, strategic dialogues or action learning projects or unsolved strategy and business problems are identified (selected) and involve external partners. It helps building skills in employees to solve a strategic problem in the company. It is a type of action learning or experiential learning for the people involved.

Driving Forces Behind the Growth of Corporate Universities

Reasons can be many and vary from institution to institution. Nonetheless, several forces are behind the impulsive growth of corporate universities for the last few decades. These forces and causes are shortlisted below (Jarvis, 2001):

  • The rapid expansion of the higher education sector.

  • Traditional universities underfunded and, therefore, a tendency to self-finance.

  • The growing demand for continuing professional education.

  • Traditional universities slow response to the needs of the rapidly globalized world of business and management (in terms of innovative, practical, effective teaching and learning methods).

  • The growth of mobile education and educational technologies. Educational and training materials can be developed, stored, and disseminated quickly in the global learning market.

  • The changing status of the student: from learner to customers, hence, making knowledge a tradable commodity.

  • The creation of the perfect market situation for the knowledge market and challenging the monopoly of knowledge by traditional universities.

Other driving forces behind the dramatic growth of the corporate universities are (Arnone, 1998):

  • The business community liked the idea and practice of corporate universities. Initially, MBA programs were supported by corporations through donations, sending workers to study MBA (work-study support), providing summer internship support and work-teach programs. Via corporate university system, such learners stay at the work-office and earn a degree.

  • Good reception by the internal and external employees (managers).

  • Recognitions of the degree programs by accreditation agencies (of course, not all graduate degrees are accredited, but such degrees are recognized and valued by the industry managers, even if they are not recognized by pure academic accreditation agencies).

  • Industries face intense competition in the global marketplace and want to provide intensive, specific training to large segments of their employed population.

  • Academic institutions are not providing enough grounding in the fast-changing new developments of their respective industries.

  • Faced with deregulation, an increasingly diverse workforce and a customer base that is demanding better service, some industries adopted the concept of corporate universities as a means of creating a diverse and well-educated workforce.

  • In the mid-1990s, several other factors became driving considerations in developing a corporate university. These considerations include reengineering, a desire to centralize resources to reduce expenses, a desire to strategically align the educational efforts of the firm with its corporate objectives.

  • A renewed appreciation for education and the popularity of corporate universities coupled with potentially low entry cost contribute to increasing momentum to reposition corporate education in a university-like structure.

The need for on-time new learning, knowledge acquisition, and knowledge application are found as driving forces behind establishing a corporate university inside the organization (Eccles, 2004). A corporation is a supplier and provider of knowledge. Hence, the purpose of education and training becomes increasingly relevant and related to the organizational objectives, needs, and interests. It shrinks to a more significant extent of corporate dependency on external organizations (traditional universities and training centers) to train and develop the workforce. Corporate universities have gone even into providing training and education to a broader group of learners, including customers and suppliers. In addition to training and development, corporate universities bring different corporate stakeholders together, and such an approach is strategically an asset for the company (Holland & Pyman, 2006; Walton, 1999).

It is essential to mention that the emerging learning and teaching models such as e-learning is also one of the driving forces behind the emergence and growth of corporate universities. E-learning involves computer-based learning, online learning, virtual classrooms, and digital collaborations. These learning services are provided using various electronic media, for example, intranet, internet, interactive TV, and satellite (Beamish et al., cited in Homan & Macpherson, 2005). E-learning is considered a source of profit and efficiency in business organizations where profitability is achieved by reducing training time, travel-cost saving, and the cost of away-from-job. Also, with a small additional cost, an e-learning facility can be provided to many learners, regardless of the time, space, and place (Sora, 2001). E-learning systems and services are closely related to knowledge management in organizations: knowledge development, dissemination, and preservation (Swanson & Holton, 2001). Corporate universities consider e-learning as an active learning model that helps companies achieve their employees’ continuous learning objectives (Jackson & Schuler, 2001). Features of E-learning such as flexibility, availability, and cost-efficiency motivate companies to internalize the learning process and system, enhancing employees’ ability to self-learn, learn from a real-life situation, and solve business problems simultaneously (Homan & Macpherson, 2005).

Differences Between Traditional and Corporate Universities

The debate on how traditional universities and corporate universities differ from each other is without any specific conclusion. Traditional universities provide different types of core services to their beneficiaries (mainly first time learners or students): teaching, research, and public service (Walton, 1999). Traditional universities also provide services like continuing education (professional training) to industry workers, business incubations, laboratory services for experimental works, and other social services. On the other hand, a corporate university is originally a training department or division of a business corporation. However, a corporate university can be considered a corporate university if they meet these conditions (Thomas, 1999; Walton, 1999), though these are not that easy to achieve:

  • Sponsorship of research.

  • Openness to access.

  • Focus on education as opposed to training.

  • Provision of high-level qualifications.

  • Evidence of scholarly activity and independence.

Blass (2001) used various other criteria to distinguish corporate universities from traditional universities and found that these two university systems are very different from each other, more than they are thought of being different. For Blass (2000), calling yourself a “university” does and will not guarantee the sameness of the two very different institutions. In support of her understanding of the two institutions and the differences between the two systems, Blass (2001) suggests that a corporate university is different from a conventional university based on the variables given in Table 3.1, which are considered fundamentals to the existence and growth of any academic institution (Adopted from Blass, 2001).

Table 3.1 Differences between corporate and conventional universities
Full size table

Differences between a corporate university and a traditional university are also found in defining the term learning. For Blass (2001), traditional universities define learning as a scholarly activity and teaching and research, while for corporate universities, learning can mean training, continuous improvement, competitive advantage, survival, effectiveness, and growth. Blass (2001) further suggests that for traditional universities, knowledge is about advancing learning, search, and extension of the frontiers while knowledge in the corporate university is about transfer within, training and learning edge.

The Impact of Corporate Universities on the Education Industry

The reality of the existence and growth of corporate universities cannot be denied or reversed now. Corporate universities are growing at a higher speed than expected. It happens to the extent that the number of corporate universities will outnumber the traditional universities very soon. This trend generates several questions to answer by the theorists and practitioners alike:

  • Is it worrying for the traditional universities in the first place? If so, what should traditional universities do to stop the growth of such universities? If not, why should not traditional universities worry about these newcomers into the education industry?

  • What are the potential impacts of corporate universities on the existing system and standards of education?

  • Will it add to the quantity or quality of institutions of higher education?

  • What are the potential implications of the evolutions of corporate universities in a short period for traditional universities?

  • What should the policymaking agencies (government and semi-government, national and international) do to ensure that the provision of quality education is guaranteed by any means?

Entry of the corporate university model into the already saturated higher education market means a highly competitive marketplace for traditional universities. Corporate universities are significant threats for traditional universities since they compete for the limited resources like qualified faculty and limited customers: the students (Thompson, 2000; Walton, 2005). Since corporate universities are growing beyond training their employees to educate other business partners, suppliers, customers, and distributors, it will increase the risk level for traditional universities in the following manners:

  • Students and diversity of students in classrooms will be affected significantly in postgraduate classrooms. Generally, students studying master’s programs are from the industry or industry workers (supervisors, directors, owners, etc.).

  • Financial revenues will be affected negatively since professional development programs (executive education, consultancy projects, and continuing education) will be run by the companies themselves (through the corporate university). In the private sector, traditional universities depend on external projects and services, including in-company training and consulting to generate financial resources.

  • Industry–university relationship that helps create patents, systems, and process will likely diminish to a greater extent.

  • Other research funds and business incubation programs coming from the industry will be affected negatively as well.

  • The foundation stone of education, such as teaching theories and philosophies of any discipline, will be given less or no importance.

  • Most universities have internships programs with local and international companies for their students, so the emergence of the corporate university will likely absorb such programs or options internally for its trainee programs.

  • Overall, the division or distance created between the traditional university system and industry by the emergence of the corporate university system will negatively affect the business and education industries.

What Should Traditional Universities Do?

The current trend and tendency of corporate universities to make business organizations as learning centers, learning organizations, knowledge management centers, intellectual management, talent management, and knowledgeable workforce are also challenging situations for traditional universities (Bok, 2003). Adding fuel to the fire, traditional universities are operating as independent operations by generating income through professional training and other fundraising activities (Walton, 2005), making the education business attractive to potential investors in the field. Various terms are used to describe the impact of corporate universities on the existing system and culture of education, such as the corporatization of universities, commodification of education, and massification of universities. As these are in direct contrast to a university where people formation is and should be a primary objective of the institution, education is at risk of extinction. What should traditional universities do in this regard? There are some strategic actions traditional universities should consider:

  • Avoid massive commercialization of higher education (Bok, 2003).

  • Not be considered as “credentialing” or, in simple terms, “degree offering” for money institutions which emphasize on students being as customers (Dasenbrock, 2002; Walton, 2005).

  • Emphasize research orientations since universities are supposed/required to generate knowledge and impart knowledge to students (learners or re-learners).

  • Focus on, more than imparting knowledge, developing competencies (knowledge, skills, and values) in their graduates.

  • To be innovative and creative in designing, delivering, and evaluating the academic programs.

  • University management must be dynamic, future-oriented, and global-minded.

  • Forging strong strategic alliances with local and international industries to serve their needs, demands, and interest through different collaborative projects.

  • Offering high-quality, flexible, and cost-effective academic programs.

Additionally, conventional business industries have strategic options to control or restrict the new entries into the industry by manipulating industry price, standard quality certification, investment requirements, suppliers, and customers. In business language, these restrictions are called industry entry and exit barriers. If provided to the conventional universities by the competent authorities, similar strategic options will help prevent or at least restrain the massive unlimited invasion of the education industry by the so-called corporate universities.

Conventional, Corporate University, Virtual Corporate University, and University Corporation

Conventional Universities: Single site 100% brick and mortar universities with classrooms and physical libraries. These universities will use information technology such as email, social networks and online databases, and some pedagogical technology platforms such as course net, blackboard, learning space, etc. Also, multiple site (multicampus) 100% brick and mortar universities with classrooms and physical libraries. Mixed model universities with virtual and physical campus are offering degrees both in traditional and virtual formats.

Corporate Universities: As defined earlier, these universities are run by parent corporations to educate their workforce but can be found in different formats. As usual companies brand their HR departments as corporate university assigned to design and impart training programs of the company workforce. Internally, such training and development programs can be offered either in traditional format or virtual or online or in a combination of these formats. A corporate university can offer degree programs to its workforce and outsiders (people from other companies or the public can pursue such degree programs). The modalities can be on-site, virtual, online, or a combination of the same. Research and development programs are internalized as well.

Virtual Corporate University: Talking about the next generation of corporate universities, Allen (2002) suggests that the next generation of corporate universities will involve the virtual corporate university. They (corporate universities) will have to provide innovative services to enhance people’s abilities and develop organizational capabilities. Therefore, for Allen (2002), these corporate universities should not function just like a company’s training department; instead, they should be revolutionary in their philosophy, practices, objectives, and management.

University Corporation: If there are corporate universities, then what is wrong with having a university corporation? Business strategists call such actions counter-attacks; strategies used by companies to counter-attack their rivals and ease down the competitive moves of the potential competitors in the industry. It means sending a message to the corporations that “If you enter my territory, I will enter yours.“ Universities can establish their businesses in different sectors, especially in service industries like retail stores, banks, hospitals, hotels, travel agencies, transportation services, and restaurants, for example, because they have:

  • Knowledge (market knowledge, models).

  • Experience (management, consultants, adjunct faculty, business labs).

  • Resources (money, time, information, people).

  • Contacts with different national and international institutions.

  • Information and communication technology.

  • Potential customers and partners.

  • Facilities and infrastructure (incubators, buildings, land).

  • University brand, name, and presence.

Final Thoughts

In short, the university board and management should recognize the fact that the corporate universities are responsible for reshaping the organizational learning system; building a solid corporate culture based on continuous learning; leading organizational changes; designing innovative business strategies; managing human talent by attracting, training and retaining the quality workforce (Collins, 1999). That is why it is essential to learn about the models of corporate universities and their impacts on the traditional university system since both institutions are in direct competition for educating the current and future workforce.

Several conclusions can be derived from the previous analyses of different aspects of the corporate universities. Corporate universities were founded for a reason, and corporate universities will be there for a reason. The reason being the need and demand for continuing education of the employees at a low cost as much as possible, delivery of the education on time, to align learning objectives with organizational objectives and internalize the process and system of knowledge management. The success and growth of corporate universities are irreversible. The impact of corporate universities on corporate performance cannot be denied, although there is no statistical evidence of the relationship between the foundation of a corporate university inside a corporation and the growth performance.